Key Takeaways
- The Prime Rate has declined 75 basis points since August 2025, from 7.50% to 6.75%, reducing maximum SBA 7(a) rates to 9.75% - 13.25% depending on loan size.
- SOFR has fallen 69 basis points over the same period (4.34% to 3.65%), compressing the spread between short-term and long-term benchmarks.
- The 10-Year Treasury has traded in a narrow band between 4.06% and 4.42% over the past 12 months, anchoring fixed-rate commercial lending products.
- The SBA 7(a) program caps create a 350-basis-point spread between maximum rates for loans above $350,000 (Prime + 3.00%) and loans under $50,000 (Prime + 6.50%).
- The gap between SBA-backed rates below 10% and alternative financing products above 40% effective APR exceeds 30 percentage points, underscoring the bifurcation in commercial lending markets.
As of March 2026, SBA 7(a) maximum variable rates range from 9.75% to 13.25%, based on a Prime Rate of 6.75%. Benchmark-linked commercial loan rates generally fall between 6% and 15%, while alternative financing products such as revenue-based financing and merchant cash advances carry effective APRs that can exceed 40% to 350%+.
Primary Data: Current Benchmark Rates and SBA Program Caps
| Rate / Program | Current Value | Source | Notes | Last Updated |
|---|---|---|---|---|
| Benchmark Interest Rates [PRIMARY] | ||||
| Prime Rate | 6.75% | Federal Reserve Board, H.15 | Base rate for most variable-rate commercial loans | 2026-03-17 |
| SOFR | 3.65% | FRBNY, SOFR | Replacing LIBOR as the primary institutional benchmark | 2026-03-17 |
| Fed Funds Target (upper) | 3.75% | Federal Reserve Board, H.15 | FOMC target range ceiling; held March 18, 2026 | 2026-03-18 |
| Fed Funds Target (lower) | 3.50% | Federal Reserve Board, H.15 | FOMC target range floor; held March 18, 2026 | 2026-03-18 |
| 2-Year Treasury | 3.68% | U.S. Treasury Dept. | Short-term fixed-rate benchmark | 2026-03-17 |
| 5-Year Treasury | 3.79% | U.S. Treasury Dept. | Medium-term fixed-rate benchmark | 2026-03-17 |
| 10-Year Treasury | 4.20% | U.S. Treasury Dept. | Long-term fixed-rate benchmark; anchors CRE and SBA 504 | 2026-03-17 |
| SBA 7(a) Maximum Variable Rates [SBA SOP] | ||||
| SBA 7(a), loans > $350,000 | 9.75% | SBA SOP 50 10 | Prime + 3.00% maximum spread | 2026-03-18 |
| SBA 7(a), $250,001 - $350,000 | 11.25% | SBA SOP 50 10 | Prime + 4.50% maximum spread | 2026-03-18 |
| SBA 7(a), $50,001 - $250,000 | 12.75% | SBA SOP 50 10 | Prime + 6.00% maximum spread | 2026-03-18 |
| SBA 7(a), up to $50,000 | 13.25% | SBA SOP 50 10 | Prime + 6.50% maximum spread | 2026-03-18 |
What the Data Shows
Short-term benchmark rates have declined meaningfully since mid-2025 while long-term rates have held steady. The Prime Rate dropped from 7.50% in August 2025 to 6.75% by January 2026, reflecting the Federal Reserve's cumulative 75-basis-point reduction in the federal funds target range to 3.50% - 3.75%. The FOMC held rates steady at its March 18, 2026 meeting, the second consecutive hold since December. SOFR tracked a parallel decline, falling from 4.34% to 3.65%.
The 10-Year Treasury, which anchors fixed-rate commercial real estate loans and SBA 504 debenture pricing, has shown less movement - monthly averages ranged from 4.06% to 4.42% over the past 12 months. This divergence has compressed the yield curve, narrowing the gap between variable-rate and fixed-rate commercial lending products.
SBA 7(a) maximum rates, mechanically tied to Prime, have declined in lockstep. The most favorable tier (loans above $350,000) now caps at 9.75%, down from 10.50% a year ago. The least favorable tier (loans under $50,000) caps at 13.25%, down from 14.00%. These are program-rule maximums; actual rates offered by individual lenders may be lower.
Market Rate Estimates by Product (CapitalXO Compiled Data)
| Financing Type | Typical Rate Range | Pricing Structure | Benchmark | Typical Term |
|---|---|---|---|---|
| SBA 504 (debenture portion) | 5.5% - 6.5% | Fixed | 5Y/10Y Treasury | 10 - 25 years |
| Bank term loan | 7.5% - 12.0% | Variable or Fixed | Prime or SOFR | 1 - 10 years |
| Line of credit | 7.5% - 15.0% | Variable | Prime | 1 - 3 years (revolving) |
| Equipment financing | 6.0% - 15.0% | Fixed | N/A (asset-secured) | 2 - 7 years |
| CRE (conventional) | 6.5% - 9.5% | Fixed or Variable | Treasury or SOFR | 5 - 25 years |
| Revenue-based financing (RBF) | 15% - 50%+ effective APR | Factor / flat fee | N/A | 3 - 12 months |
| Merchant cash advance (MCA) | 40% - 350%+ effective APR | Factor rate | N/A | 3 - 18 months |
12-Month Benchmark Rate Trends
| Month | Prime Rate | SOFR | 10-Year Treasury |
|---|---|---|---|
| Mar 2025 | 7.50% | 4.33% | 4.28% |
| Apr 2025 | 7.50% | 4.35% | 4.28% |
| May 2025 | 7.50% | 4.31% | 4.42% |
| Jun 2025 | 7.50% | 4.32% | 4.38% |
| Jul 2025 | 7.50% | 4.34% | 4.39% |
| Aug 2025 | 7.50% | 4.34% | 4.26% |
| Sep 2025 | 7.38% | 4.30% | 4.12% |
| Oct 2025 | 7.23% | 4.20% | 4.06% |
| Nov 2025 | 7.00% | 3.98% | 4.09% |
| Dec 2025 | 6.84% | 3.80% | 4.14% |
| Jan 2026 | 6.75% | 3.66% | 4.21% |
| Feb 2026 | 6.75% | 3.67% | 4.13% |
| Mar 2026 (latest daily) | 6.75% | 3.65% | 4.20% |
Benchmark Rate Trends: Prime, SOFR, and 10-Year Treasury
Interpretation and Market Implications
The 75-basis-point decline in Prime directly reduces variable-rate borrowing costs across the SBA 7(a) program and conventional bank credit lines, but the persistence of the 10-Year Treasury above 4.00% means fixed-rate products have not seen comparable relief. This divergence creates a structural decision for borrowers evaluating fixed versus variable rate structures: variable-rate SBA 7(a) loans at the most favorable tier now cap at 9.75%, while compiled estimates place fixed-rate bank term loans in the 7.5% - 12.0% range.
With Prime at 6.75% and the 10-Year Treasury at 4.20%, the spread between the two has contracted to 255 basis points, down from 322 basis points a year ago. This narrowing reduces the penalty for choosing fixed-rate structures. The SBA 504 program illustrates the split: the bank first-mortgage portion floats with Prime or SOFR while the CDC debenture portion locks at Treasury-based pricing.
At the far end of the cost spectrum, compiled estimates for revenue-based financing and merchant cash advances remain orders of magnitude above benchmark-linked products. The decline in benchmark rates has not materially compressed costs in these segments, where pricing reflects credit risk and capital structure rather than monetary policy transmission. The gap between SBA-backed rates below 10% and alternative capital above 40% effective APR (more than 30 percentage points) underscores the bifurcation in commercial lending markets. The CapitalXO weekly borrowing cost snapshot tracks these benchmark movements in more granular detail.